Tanzania’s Central Bank has asked commercial banks to consider
lowering their lending rates to help spark credit growth in east Africa’s second-largest economy, according to media reports on Saturday.
Bank of Tanzania cut its discount rate to 12 per cent from 16 per cent effectively from March 6, the first time it has lowered borrowing costs since 2013, after a steep drop in private-sector credit growth last year.
There were expectations that the move “will enhance credit growth and reduction in lending rates,” central bank Governor Benno Ndulu said in a statement late on Friday.
Ndulu made the statement after a meeting with chief executives of commercial banks in Dar es Salaam.
Bank of Tanzania’s decision to slash the rate it charges commercial-lenders to borrow from it — one of its main-monetary-policy-tools — came after lending to the private-sector grew by 2.5 per cent in 2016 after expanding 26.8 per cent a year earlier, according to official data.
The International Monetary Fund warned in January that tight fiscal and monetary policies threatened Tanzania’s forecast for growth of around seven per cent in fiscal year 2016/17, which ends in June.
(Reuters/NAN)
UDO/PIO
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